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Article by Mohan Babu

Business Intelligence: Strategically Relevant?
IN TODAY'S BUSINESS ENVIRONMENT, SENIOR executives are focused on differentiating their business strategies, and are looking for answers to their persistent questions including: What characteristics do our most profitable customers share, and how can we serve them better? Where are we spending money and seeing the best returns? The challenge is to provide each knowledge worker with a focused view into the right business intelligence information in order to tighten the time frames throughout the decision cycle. BI systems help managers address tactical and strategic issues:
• Operational or tactical questions help line managers plan their regular operations. Such questions include: "What is the current production volume?" Or “What were the sales from the western region last week?” These questions can be answered by running fairly simple queries or by generating periodic reports.

• Strategic questions are tougher to answer. BI queries or reports alone cannot answer strategic questions like “What is the impact of SARS on our projections for Fiscal'04 forecasts? ”or “How much will we save by outsourcing our call center to a BPO in India?” However, BI reports and queries form the basis for further analysis and research to aid executives' address such strategic issues.
Business Intelligence implementations aim to answer these kinds of questions, which directly impact the bottom line. However, typical BI implementations are notorious for cost overruns and over-promising but failing to deliver. The continuing slump in the U.S. and global economies has made business leaders extremely vary of promises offered by technical initiatives. Adding to this mood of caution is the ongoing debate on the strategic importance of Information Technology and the commoditization of technology solutions.

Is IT Strategically Relevant?
Recent articles in the business press have stirred debate on the role of IT in an organization's business strategy. Professor Nicholas Carr, in the May'03 issue of Harvard Business Review, argues that as information technology's power and ubiquity have grown, its strategic importance has diminished. He says “technology's potential for differentiating one company from the pack - its strategic potential-inexorably declines as it becomes accessible and affordable to all…are becoming costs of doing business that must be paid by all but provide distinction to none.”

Executive management in large organizations has begun to recognize the fact that in most cases, IT does not form the core competency, and may not even form a part of the strategic mix. Widespread deployment of Web Services and On-Demand services (getting a big push from IBM and HP) will further mitigate the need to own and manage large in-house application systems
Commoditization of Information Technology
Business leaders are becoming aware of the commoditization of software solutions. Software offerings from different vendors are starting to look distinctly similar, with very little differential in terms of functionality or underlying technologies. CIOs no longer grapple with "make or buy" decisions: there is a distinct shift toward deployment and customizing of prepackaged software.

Business Intelligence, along with other areas of IT, is seeing a trend toward commoditization of tools and offerings, a fact articulated by Michael Haisten: “The business intelligence vendors are now struggling with how to proceed as their products become commodities. Many failed to see that their differentiation would erode quickly. They face the pressure to incorporate broader functionality, extend their product lines, differentiate their businesses or consolidate (via merger) before they are eliminated from the market…. The truth is that virtually all generic reporting and query technologies are functionally equivalent. The feature differential is both real and, at the same time, immaterial. Consolidation is already underway. The vast majority of business intelligence offerings available in 1998, the approximate peak in terms of vendor offerings, are already gone.”

Packaged analytics are supplanting home-grown applications. Infrastructure and solutions provided by BI and analytic vendors are robust, inclusive and economical. These BI packages offer standard queries, reports, architectures and adapters into popular business applications. With the ease of deployment and integration offered by pre-packaged BI solutions, the focus is shifting from deployment to analytics that make a difference.
Business Intelligence: Continues to be strategically relevant
Commoditization of BI tools does not mitigate the strategic relevance of Business Intelligence. Insights gained by analysis of BI reports can provide tremendous strategic advantages to business units across an organization. Decisions based on timely and accurate information can help companies gain significant competitive advantage.

Translating insights gained from BI queries into action can help companies respond more quickly to changing market conditions and increase profits. However, in the current economic climate, businesses are unwilling to invest resources on new initiatives unless absolutely necessary and even that at the lowest possible cost. Enterprises view business intelligence as a tactical, technology issue. According to Gartner8: “Enterprises too often treat business intelligence (BI) and data warehousing as after-the-fact, technical exercises to be addressed by their IS organizations after a new application has been implemented.” However, it is expected that enterprises will start viewing BI as a strategic initiative, making it a catalyst for business change and gain from greater insight into the business.




About the Author

  • A Bio and profile of the author, Mohan Babu, can be found at his homepage
  • Mohan has authored a book on Offshoring and Outsourcing (Publisher McGraw Hill, India), a link to which can be found here
  • Mohan has also authored an Online book on "Life in the US," available for free download.
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    ©Mohan Babu: All Rights Reserved 2005

    Mohan Babu is an international consultant trying to find the ‘sweet spot’ where IT meets business. E-mail: mohan He is also the author of a recent book on "Offshoring IT Services"

    All rights are reserved. Mohan Babu ("Author") hereby grants permission to use, copy and distribute this document for any NON-PROFIT purpose, provided that the article is used in its complete, UNMODIFIED form including both the above Copyright notice and this permission notice. Reproducing this article by any means, including (but not limited to) printing, copying existing prints, or publishing by electronic or other means, implies full agreement to the above non-profit-use clause. Exceptions to the above, such as including the article in a compendium to be sold for profit, are permitted only by EXPLICIT PRIOR WRITTEN CONSENT of Mohan Babu. 

    Disclaimer: This document represents the personal opinions of the Author, and does not necessarily represent the opinion of the Author's employer, nor anyone other than the Author. This Article was originally published in Express Computers


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